Forster resigns from Tata Motors

This is a discussion on Forster resigns from Tata Motors within The Indian Car Scene, part of the BHP India category; The link:-
Tata Motors CEO resigns after less than 2 years | Reuters
Reasons cited are personal and unavoidable. The ...

Does this mean that TATA's focus on quality is back to square one? Though I am disappointed with the delay of Merlin launch, I was happy that we finally will get a hopefully "leagues" ahead Safari & also future products. I seriously hope they replace this guy with someone who is equally strict about product quality.

Well I am not at all surprised. As a Design vendor to TML I used to get a lot of internal feedback of the politics taking place. ( I stopped doing work for them when they cut our rates to such low levels that it made more sense to beg on the streets- more of this later.)

Sumantran was the first ousider who tried to break the sloppy quality & half baked product development culture at the firm. As person in charge of ERC (Engg research centre or Enginners recreation centre in my days!!) he used to be stubborn as a rock in insisting that all test should be carried out, corrective action taken and then only product to be cleared for production. I personally know that he substantially improve the INDIGO & the INDIGO XL. Was also tackling a lot of problems with the Safari.

On the other hand Ravi Kant embarked on a mindless cost cutting exercise. Deep cuts in budgets, rates for vendors etc. always have an effect of showing immediate savings but do work out in the long term. ( one of the effects- the Indica's rear suspension camber angle goes phut in a significant no of cars!. In 2006/2007 they asked me to cut me design rates to such a level that I would be able to pay my engineers only Rs. 3000 p.m. I just walked away.)

So you had 2 people competing for the post of MD. - One who was showing immediate results & another who was doing things for the long term good but increasing current pain. Guess who won??

So TML is now in a position where its brand value has been totally destroyed. No pricing power, no unique point anymore as the competition has also developed diesel cars. The only segment where they still reign is the HCV & that is under a medium term threat.

So Forster tried to continue where Sumantran had been stopped. No way that he would have been allowed to succeed. So look forward to shabbier products & lower pricing.

Well I am not at all surprised. As a Design vendor to TML I used to get a lot of internal feedback of the politics taking place. ( I stopped doing work for them when they cut our rates to such low levels that it made more sense to beg on the streets- more of this later.)

Sumantran was the first ousider who tried to break the sloppy quality & half baked product development culture at the firm. As person in charge of ERC (Engg research centre or Enginners recreation centre in my days!!) he used to be stubborn as a rock in insisting that all test should be carried out, corrective action taken and then only product to be cleared for production. I personally know that he substantially improve the INDIGO & the INDIGO XL. Was also tackling a lot of problems with the Safari.

On the other hand Ravi Kant embarked on a mindless cost cutting exercise. Deep cuts in budgets, rates for vendors etc. always have an effect of showing immediate savings but do work out in the long term. ( one of the effects- the Indica's rear suspension camber angle goes phut in a significant no of cars!. In 2006/2007 they asked me to cut me design rates to such a level that I would be able to pay my engineers only Rs. 3000 p.m. I just walked away.)

So you had 2 people competing for the post of MD. - One who was showing immediate results & another who was doing things for the long term good but increasing current pain. Guess who won??

So TML is now in a position where its brand value has been totally destroyed. No pricing power, no unique point anymore as the competition has also developed diesel cars. The only segment where they still reign is the HCV & that is under a medium term threat.

So Forster tried to continue where Sumantran had been stopped. No way that he would have been allowed to succeed. So look forward to shabbier products & lower pricing.

That was quite an insight! Not surprising that Carl-Forester decided to quit.

You need a balance between quality and costs. At the end of the day Mr. Ravi Kant has been credited with what can probably be the most glorious years of Tata Motors. He is also a very very important part of the team that helped both acquire and turn around Jaguar and Land Rover.

And if Forster had to quit, why did he not quit the Board too. Why hang on to a board seat??

There are always two sides to every coin. And to find that there is politics in Tata Motors, which company doesn't??

I am not surprised by some of the comments here. Our company also tried to work with TML, things started looking bad when we learnt a bit that they are using our brains and employing low cost vendors to do the same. It is sad that the iconic Indian manufacturer with global aspirations resort to such cheap or "low cost" measures. How can we succeed if we dont have original ambitions?

Tata Motors is definitely one of the most stingy companies known out there. I did work for them for a few months, so I do know that part.

But even then I wouldn't doubt that they want to make quality products.

Every company has its way of working. That "stingyness" and cost sensitivity has them so popular in the taxi segment, and also in the CV sector.

That quality is also what helped bring down costs at JLR and turn them into massive assets, that a massive company like Ford must be regretting that it sold off. Tata paid about 2.3billion dollars for JLR, and last financial year JLR mus have made about 1.5-2 billion dollars in profit.

Though I do agree, that strategy can only be stretched so far. It will take time for them to learn that, and I think we are definitely seeing improvement on that front.

For example, the Manza feels a lot better than the Etios in interior trim and lots of other places. Even their reliability has made much improvement over the past few years.

Even in the CV segment they have come up with ambitious products like the Tata Prima, which are marginally costlier than some others but are far more value for money and much better quality.

You need a balance between quality and costs. At the end of the day Mr. Ravi Kant has been credited with what can probably be the most glorious years of Tata Motors. He is also a very very important part of the team that helped both acquire and turn around Jaguar and Land Rover.

And if Forster had to quit, why did he not quit the Board too. Why hang on to a board seat??

There are always two sides to every coin. And to find that there is politics in Tata Motors, which company doesn't??

Well some background in how the game changed over the years. I remember in 1981-82 Moolgaonkar ticking off his managers for trying some
stupid costcutting - His words were something along these lines: " The buyer pledges his wife's jewels to buy our truck. So ensure that he is not affected. I do not mind reducing our profit but I will not hurt the customer".
Once Moolgaonkar retired the "professional Managers" took over & bled the company dry - some corruption and some plain stupidity.
Today the case is that for most components TML does not even pay for economic price increases of Raw Materials, let alone other costs. So obviously people either quit supplying or cut corners. Mahindra on the other hand is proactive in keeping their vendors happy.
So TML have long ago lost their balance over quality vs, costs. Their senior Fixture designer (now retired) summed it up perfectly- TML has lost control of the manufacturing process.

And they do not listen to good ideas. In one family of components I saved them over Rs. 1 Crore of tooling costs & improved quality & also lifelong reduced production costs. But they were not willing to increase my design charges by even Rs. 1,000. Penny wise & pound foolish.

I was actively involved for quite a few years as design vendor & I know the inside nonsense well enough. It is a tribute to the original (German & Peugeot engine tech for Indica) design that they have managed to carry on so far.

As for Foster hanging on to the board job- I feel it will be a short term affair till he finds some other job or decides to retire.

Well some background in how the game changed over the years. I remember in 1981-82 Moolgaonkar ticking off his managers for trying some
stupid costcutting - His words were something along these lines: " The buyer pledges his wife's jewels to buy our truck. So ensure that he is not affected. I do not mind reducing our profit but I will not hurt the customer".
Once Moolgaonkar retired the "professional Managers" took over & bled the company dry - some corruption and some plain stupidity.
Today the case is that for most components TML does not even pay for economic price increases of Raw Materials, let alone other costs. So obviously people either quit supplying or cut corners. Mahindra on the other hand is proactive in keeping their vendors happy.
So TML have long ago lost their balance over quality vs, costs. Their senior Fixture designer (now retired) summed it up perfectly- TML has lost control of the manufacturing process.

And they do not listen to good ideas. In one family of components I saved them over Rs. 1 Crore of tooling costs & improved quality & also lifelong reduced production costs. But they were not willing to increase my design charges by even Rs. 1,000. Penny wise & pound foolish.

I was actively involved for quite a few years as design vendor & I know the inside nonsense well enough. It is a tribute to the original (German & Peugeot engine tech for Indica) design that they have managed to carry on so far.

As for Foster hanging on to the board job- I feel it will be a short term affair till he finds some other job or decides to retire.

Well, I am not denying that there are stupid people at Tata Motors, I got to see a lot many of them in very very short stint.

Neither am I saying that everything is rosy in the company.

But there are always two sides to everything. Its not all bad, neither is it all good.

Also at the end of the day, if we look at the complete picture, they dont seem to be doing that badly do they.

Also, do you think a guy like Forster would need time to find another job?? The guy managed GM Europe for half a decade, and also was at senior positions with BMW for a long time. He also played a crucial part in helping Tata turn around and bring momentum to the growth stories of Jaguar and Land Rover.

I also doubt he needs the money so as to hold on to a board position in a company based out of India. He could easily have got himself board positions in so many top companies in the world.

Also, why would Tata Motors want to hold on to somebody for a short stint as board member, that too a non-executive one??Basically he is going to sit and earn money for attending a few meetings and giving some opinions??

Sad to hear. Forster made super work of bringing Jaguar-Land Rover to profitability (and how!). On the other hand, Tata Motor's performance in the Indian passenger car market is extremely poor. The Nano is on the verge of being branded a flop, while the Indica / Vista, Indigo / Manza and Sumo sales are below their price + product competency capability. Tata Motor's passenger car sales took a 30% hit in August 2011 (YOY).

This comes at an extremely crucial stage and the timing couldn't have been worse. Plus, the search for a successor for Mr. Ratan Tata is also underway.

Quote:

Originally Posted by julupani

That "stingyness" and cost sensitivity has them so popular in the taxi segment

The taxi segment is a fraction of the overall (personal) passenger car market. And it's exactly that stinginess & cost sensitivity that has hurt their reputation, in terms of reliability & niggles. Cars like the Chevy Beat have proven that a VFM price does NOT equate to cheap quality. For a sub-5 lakh rupee price, you might also want to check out the Honda Brio and experience it's quality.

Sad to hear. Forster made super work of bringing Jaguar-Land Rover to profitability (and how!). On the other hand, Tata Motor's performance in the Indian passenger car market is extremely poor. The Nano is on the verge of being branded a flop, while the Indica / Vista, Indigo / Manza and Sumo sales are below their price + product competency capability. Tata Motor's passenger car sales took a 30% hit in August 2011 (YOY).

This comes at an extremely crucial stage and the timing couldn't have been worse. Plus, the search for a successor for Mr. Ratan Tata is also underway.

The taxi segment is a fraction of the overall (personal) passenger car market. And it's exactly that stinginess & cost sensitivity that has hurt their reputation, in terms of reliability & niggles. Cars like the Chevy Beat have proven that a VFM price does NOT equate to cheap quality. For a sub-5 lakh rupee price, you might also want to check out the Honda Brio and experience it's quality.

Like I said, the strategy can only be stretched so far. They need to move out of their CV mentality for passenger cars and move to a decidedly passenger car oriented strategy.

Probably an extreme step would be separating out the CV part and the Passenger car part completely.

Though yes, there is some independence between Tata's CVBU and PCBU, but the attitudes are shared.

What worked and is continuing to work for CV segment need not work for passenger cars.

And even if we look at internal Tata sales, we see in this year of downturn, the passenger car side is showing more than expected fall in sales, having fallen by 33 percent till August this fin year compared to last year.

But look at the CV numbers. Their total CV sales have registered a 17% growth, whereas their biggest competitor Ashok Leyland has seen a fall in sales by 8%. Even if we consider only the HCV market as Leyland doesnt really compete in the LCV market, we see a similar situation. Leyland sales fell by 7.5% while Tata's increased by 8%.

Take a look at last quarter results of Tata Motors. Revenues actually grew by 24% over last year. Even though PBT actually fell by around 3%, most likely due to rising input costs.

So what I am trying to say is there is lot more to Tata Motors than the Indica/Indigo/Nano/Safari. Just like taxi segment is a small part of passenger car sales, the entire Indian passenger car segment probably accounts for 10-15% of Tata Motor's revenues. Tata Motors happens to be a company that is more than 3 times the size of MSIL, which controls half of India's passenger car sales.

So even though there are problems, there are many many good things too. And overall things are on the good side if you ask me. And the direction the company is moving in definitely looks to me like the right one, and the speed at which they are doing it is pretty healthy as well.

for some strange reasons, anything happening in TML becomes a sensation here and a blame game begins that TML is not paying vendors / too much internal politics and bla bla bla .

nobody knows the real "personnel reasons behind this resign" is and we start blaming poor vendor payments and internal politics straight way .

i don;t think taxi segment is miniscule in india market. it was a huge opportunity waiting to be tapped and tata;s not only tapped that but also monopolized the segment. they have created a segment for themselves in the market. it will be interesting to see the stat;s wrt to whats the size of taxi segment in India.

as for internal politics goes, show me a single company ( any industry ) where there is no internal politics. i guess we are reading too much into this resignation. the person still says inside TML stable. quality wise i think they are just 1 or 2 point behind the competitors . what they need to resolve is niggling issues in their cars.

I am surprised that a change of guard at the top is bringing so much negativity to Tata Motors. Before Forester took over was it th case, I dont think so. Everytime the CEO changes people have the apprehensions initially that Tata Motors is doomed but every new CEO has brought in a new change. I hope even this time the chnage of guard would do something good for the TML.

One of my relatives who works at the Bombay house says its business as usual. The only worry now is that the successor find for Ratan Tata just got a bit more difficult, I guess he'll have to stay for longer.

I am surprised that a change of guard at the top is bringing so much negativity to Tata Motors. Before Forester took over was it th case, I dont think so. Everytime the CEO changes people have the apprehensions initially that Tata Motors is doomed but every new CEO has brought in a new change. I hope even this time the chnage of guard would do something good for the TML.

One of my relatives who works at the Bombay house says its business as usual. The only worry now is that the successor find for Ratan Tata just got a bit more difficult, I guess he'll have to stay for longer.

People here are worried because of something that contributes 10-15% of Tata Motors revenues is in a bit of trouble.

For somebody at Bombay House, even entire Tata Motors contributes about a third of the revenues of the 75+billion group. The Indian passenger car segment probably contributes about 2-3% of Tata Group revenues. No wonder its business as usual.